German Chancellor Angela Merkel will meet Greek Prime Minister Antonis Samaras in Athens Tuesday. They are expected to discuss austerity measures Greece should implement to receive the bailout fund from the European Central Bank (ECB).

Eurogroup Chairman Jean-Claude Juncker Monday expressed satisfaction over the progress made by Greece on austerity measures. "We were happy to learn that substantial progress has been made over the last weeks. We called on the Troika and Greece to finalize their negotiations and agree on ways to close the fiscal gap for 2013 and 2014 as soon as possible," he said at a press conference in Luxembourg.

On the fiscal front, Greece made some progress in its budget for 2013 with measures to reduce the deficit from 6.6 percent of GDP to 4.2 percent. But there are concerns that the budget is too optimistic and the economy will shrink by as much as 5 percent next year. So it is likely that there will be a need for additional wage and pension cuts in return for signing off the fiscal package.

Meanwhile, hopes that Spain will soon ask for a bailout is continuing. Investors feel that it would be unwise on the part of the Spanish government if it takes more time to seek the bailout. Market participants expect that Spain will ask for the bailout under the enhanced conditions credit line, which will trigger the bond-purchasing operation by the ECB.